What is a Credit Report?
A credit report is a comprehensive report that provides insight into a company’s creditworthiness based on various sources and analysis. Based on this information, an applicant can firstly decide whether or not to engage with a customer. Also, you can immediately see what risks are involved and which conditions are best suited to a possible collaboration.
What does a credit report say?
A comprehensive credit report provides an assessment of both a company’s current and future financial situation. Also, a credit report describes other issues, such as company structure, any negative media reports, a company’s development and how the company performs against similar companies (so-called benchmarks).
All this information is then used to establish a credit limit with a credit score. Based on this, you as an entrepreneur can make a good assessment of your business partner’s creditworthiness and reliability. So a lot of misery can be saved with this!
Reasons to request a credit report:
There are several reasons to request a credit report. Below, we list 3 of them.
- Defaults biggest cause of business failures
Late payers and defaulters have a major impact on a company’s cash flow and can even cause a company to go bankrupt. A report can be used to mitigate this kind of financial risk.
- Small investment, big return
Requesting a report is relatively cheap compared to the risk you run when you default on a large sum. So this small investment can pay you a lot in the long run.
- More time for own work
In a credit report, you can see in advance a customer’s payment behaviour. Do customers always pay nicely on time or do they often wait just a few extra weeks? Requesting a report will prevent you from having to chase a client for weeks later to get your earned money. Instead, you keep more time for your own work.
In short: prevention is better than cure. Knowing who you are doing business with can save you a lot of trouble. So requesting a report from new customers is not a luxury.
Debitan allows you to request a credit report at an additional cost. Contact us for more information.